Section 5/Week 5

Question 1

Managed Competition

Answer 1

a theory of health care reform.

a system of health care, either on a local, regional, state or national level in which patients choose between competing systems of managed care

Question 2

Managed Care is

Answer 2

a way of delivering care

Question 3

Alain Enthoven-Father of Managed Competition-proposed

Answer 3

• employers should join together in Health Insurance Purchasing Cooperaatives (HIPC) to purchase health coverage
• HIPC’s would in turn shop around among managed care plans to select the best options for their members

Question 4

What do consumers need to choose wisely

Answer 4

• information about the quality of the care within the plan (HIPC responsible for making info available to consumers)
• ability to compare prices for comparable levels of coverage (each plan must provide a basic level of coverage for all plans)

Question 5

What are some other characteristics required for for Managed Competition to work optimally

Answer 5

• employer will only pay a fixed amount to purchase health coverage (employee must pay for any extras)
• the tax codes would need to be changed (if employee chooses more expensive plan, the difference in price would be subject to income tax)

Question 6

Present day health insurance purchasing cooperatives

Answer 6

Health Exchanges!

Question 7

Clinton 1994

Answer 7

Failed health reform plan; based on the theory of managed competition

Question 8

Health Insurance Exchange under the Affordable Care Act

Answer 8

• nonprofit, quasi-governmental organization that acts as a brokerage agency for a range of health insurance plans
• organized on a state or regional basis
• uninsured individuals go to the exchange to select a plan and to arrange government subsidy if eligible

Question 9

Health Insurance Cooperative

Answer 9

• free-standing nonprofit health insurance company
• formed by patients and members
• need enough members to spread the risk of paying for health care
• many contend it is no longer feasible to create patient cooperatives

Question 10

Although Clinton’s plan did not pass (fear of big govt), many private sector HIPC’s were able to be generated. What effect did these HIPCs have on health care

Answer 10

• constrain the rise in premiums from year to year
• establish a “standard benefits package” for all competing managed care plans to offer
• publish comparative price and quality data in HEDIS for consumers to use in making health plan choices

Question 11

How long was managed care able to constrain costs for?

Answer 11

Until about 2001.

It stopped being able to contain costs because of growth in technology, an aging population, and increasing public expectations.

Question 12

What’s the new alternative to managed care

Answer 12

the consumer directed health plan (CDHP) with a health savings account (HSA)

Question 13

describe CDHPs and HSAs

Answer 13

• patients are responsible for their medical care costs per year, with the hopes that they will use less care
• HSA combined with a PPO with a high annual deductible
• unused funds roll over to the next year

Question 14

Results of consumer-directed plan enrollment

Answer 14

-consumers cut back on the use of some beneficial services

Question 15

For-Profit ownership of managed care plans

Answer 15

• 64% of patients enrolled in HMOs are in for-profit plans
• Most PPOs are organized on a for-profit basis
• PPOs have grown to have a larger market share than HMOs

Question 16

the for-profit corporation must balance the needs of the patient with

Answer 16

the needs of the shareholders

Question 17

What happened in the 1990s when the stock market had readily available capital

Answer 17

regional nonprofit plans were having trouble surviving, so there was a rapid consolidation into a relatively small number of national plans, most organized as for-profit corporations

Question 18

What is the medical loss ratio (MLR)

Answer 18

money paid by insurance companies for medical purposes

Question 19

What does the ACA mandate in terms of the MLR

Answer 19

• for large group markets, MLR capped at 85%
• for small group markets, MLR capped at 80%
• companies that don’t meet MLR caps must refund the difference to their enrollees

Question 20

Control mechanisms used by managed care organizations

Answer 20

• Gatekeeping (direct and indirect financial interest)
• Bonus (direct and indirect)
• Prior authorization
• Emergency Care

Question 21

For-profit conversion was associated with

Answer 21

better subsequent financial health but had no relationship to the quality of care delivered or to mortality rates

Question 22

4 Basic Principles of Health Insurance Purchasing Cooperatives

Answer 22

• Employees from a variety of companies band together to create a health insurance purchasing cooperative (HIPC)
• HIPCs shop among other managed health care plans to select best options (professional staff evaluate the quality)
• Managed care plans hoping to compete for business of HIPC would be required to offer basic benefit package, covering specified range of health care services (standardization)
• HMOs and competing health plans would be free to offer coverage options beyond basic benefit package. Consumers would pay additional cost out of pocket.

Question 23

What are gatekeepers?

Answer 23

Patients must see primary care physician before they are permitted to consult a specialist, have a test, or be admitted to a hospital.

Question 24

Utilization Review

Answer 24

• Staff of physicians and nurses that reviewed care provided
• Had to obtain permission from utilization review department, failure to obtain this prior authorization led to managed care companies refusing to pay for service

Question 25

What are physician practice profiles

Answer 25

• Gathered stats on how often each physician used expensive resources
• Company penalized physicians whose profile exceeded what reviewers thought was appropriate
• Managed care companies terminated contract of physicians

Question 26

What are holdbacks

Answer 26

Managed care companies held back a portion of the payment due to the physician (10-15%)

Question 27

What is a direct bonus

Answer 27

Amount of bonus determined by how well physician had kept costs down during the year (less ethical)

Question 28

What is an indirect bonus

Answer 28

Each physician receives a bonus in the form of a slice from the shared pool (more ethical)

-tied to the ability of medical groups as a whole to hold down costs

Question 29

Describe the Managed Care Backlash

Answer 29

Patients perceived that they were being denied appropriate care even though many of the utilization review practices were based on sound evidence. HMO’s gave up on many of their cost control strategies and health care costs began to rise again.

Question 30

What does the HEDIS Scale Measure? What does it not measure?

Answer 30

The HEDIS scale measures process; ie) how well a health plan follows well-established guidelines for the prevention or treatment of certain conditions (not health outcomes).

Question 31

How do for-profit and nonprofit plans compare on the quality-of-care measures included in the HEDIS scale?

Answer 31

Not-for-profits fare a little better on the HEDIS scale

Question 32

Do for-profit plans provide the same quality care to poor children on Medicaid as the do to children with private insurance?

Answer 32

Despite being enrolled in the same health plan, Medicaid children had lower HEDIS scale scores. Socioeconomic factors might be to blame for the differences in the scores.